RE:RE:RE:RE:TCs and domestic consI workded in the electrolytic copper and zinc business........
I have never seen a tonnage report/reconciliation of the inventory only a dollar value. They sometimes (and only sometimes) indicate how many tonnes the inventory RM or FG inventory has increased/decreased but never tgive us a complete tonnage reconciliation or tell us how much con or metal is in inventory. For sure that is on purpose. Every time people have asked about inventory they get a baffelgab answer that is meant to confuse...
A few days ago I posted a fairly accurate (+-10%) calculation of the inventory tonnages. If somebody has better numbers or a knowledge of the Con and metal tonnage please pass it on. Here is where I saw the inventory tonnage based on a production rate of 22500 per month = 5200 tonnes per week
- Zn in con 70,000 - 120000 t Zn = 12 -20 weeks
- WIP constant at 7500 t = 1.5 weeks
- finished metal 30000 - 50000 t Zn = 8 -12 weeks
- Total 100,000 - 170,000 = 20 - 32 weeks
Subsequent to the Q4 report I was able to calculate
- Zn in con 48,000 t Zn = 9 weeks
- WIP constant at 7500 t = 1.5 weeks
- finished metal 30000 t Zn = 6 weeks
- Total 78,000 = 15 weeks
From the 2012 MD&A
YE 2012 inventory was RM $44mm WIP 12mm FG 30mm = $86mm
At that time the LME was 88 vs 95 cents per Lb and the US FX was 1.00 vs 1.33. This alone accounts for an increase of 7/88 = 8% LME and 33% FX = 44% increase in the 2012 inventory value in todays terms = $86 mm x 1.44 = $124 mm.
When I use the same method to calculate the 2012 inventory tonnages I get
- Zn in con 34,000 t Zn = 7 weeks
- WIP constant at 7500 t = 1.5 weeks
- finished metal 15,000 t Zn = 3 weeks
- Total 50000 t Zn = 10 weeks
An increase in concentrate tonnage was anticipate due to the lumpy deliveries and requirement to blend the concntrates to insure that the plant does not overdose on the impuities in the available imported concentrate. They previously stated that concentrate inventory would average about 3 months = 70000 t Zn = 140000 t con . This appears to be on track with what they said
The finished goods inventory has esentially doubled from 15000 to 30000 t Zn. The cynic in me says they have done this on purpose to screw with the earnings and EBITDA. But it also could be the new "normal" as they manage the customer base to maximize premiums.
It is worth noting that after May1 it won't matter because the finished goods inventory will be purchased by Glencore at the end of each month.
BB